WiMax Pushed Out of the Nest

10/02/2008 8:00 PM Eastern

By: Todd Spangler

In the commercial U.S. debut of a technology central to the wireless strategies of Comcast and Time Warner Cable, Sprint Nextel last week launched WiMax broadband wireless service in its first market, Baltimore.

Sprint's Xohm service (pronounced “zome”), which provides average download speeds of 2 to 4 Megabits per second, is designed to be either a wireline broadband replacement or a mobile Internet service.

Coverage targets: Able to reach 60M-80M people by 2009, 140M by 2010, 200M by 2011

With the Baltimore launch, Sprint intends to test price points and customer uptake to inform rollouts in other markets, spokesman John Polivka said.

But the task of building WiMax into a national service will fall to a different entity: Sprint expects to merge its WiMax operations with broadband wireless provider Clearwire in the fourth quarter to form a new company.

The combined company, to use the Clearwire name, will receive $3.2 billion in additional investment from Comcast, Time Warner Cable, Bright House Networks, Intel and Google.

This is act two for the three MSOs on a major wireless-business initiative with Sprint. The first time around, things ended badly, with the disbanding earlier this year of Pivot, the mobile-phone service provided by Sprint that the MSOs tried to resell.

What's different this time: the cable partners in the Clearwire venture will wholesale WiMax service and will be able to offer different retail price points and plans.

When the WiMax joint venture was announced in May, Comcast CEO Brian Roberts said the deal “puts in place very attractive wholesale relationships for access to Sprint's existing 3G and Clearwire's 4G networks, giving us complete flexibility to introduce wireless mobility, in terms of product innovation and deployment.”

Sprint's Baltimore launch comes about five months later than its previous April target. That's because the carrier had to build out backhaul capacity to meet the capacity provided by the WiMax access network in the city, according to Polivka.

“You don't want to connect a fire hose to the equivalent of a garden hose,” he said.

Analysts noted WiMax still has a two-year head start on competitors AT&T and Verizon Wireless, which have cast their lot with a rival wireless broadband technology, Long Term Evolution (LTE).

If Sprint is successful with WiMax, “this could be a big booster for a company that has struggled over the last few years,” independent telecom analyst Jeff Kagan wrote in a research note last week.

Sprint's pricing plans for WiMax service in Baltimore include a $10-per-day pass; $25 per month for home Internet service ($35 after a six-month introductory period); and $30 per month for mobile service ($45 after six months).

In addition, Sprint is offering a $50 per month “for life” option covering two different WiMax devices.

Sprint also launched a customizable Web site, called MyXohm, which will focus on local services and entertainment content.

Customers will need WiMax-based cards to receive the service. Sprint said Xohm-branded cards from Samsung ($59.99) and ZyXel Communications ($79.99) are available now, with additional WiMax devices — such as notebook PCs that use Intel's Centrino 2 WiMax chips — expected to be on the market later this year.

The wireless carrier has not said when it plans to launch commercial service in other areas, but has identified the next two markets as Chicago and Washington. Those will be followed by Boston, Providence, R.I., Philadelphia, Dallas and Fort Worth, Texas.

Last week, Motorola announced that its WiMax equipment had passed Sprint's network acceptance tests in Chicago, where the companies have deployed nearly 600 WiMax base stations.

Nationwide, Sprint's Xohm WiMax network will use the 2.5-Gigahertz spectrum holdings that were combined in the Sprint and Nextel merger.

Clearwire, meanwhile, has been testing WiMax in one market — Portland, Ore. — and plans to upgrade the rest of its approximately 50 U.S. markets to mobile WiMax. Clearwire, founded in 2003, uses a proprietary technology similar to WiMax to deliver service to existing customers.